UPDATE 2-China urges U.S. to return to reason on trade, says tactics won't work

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* U.S. ‘blackmail’ move will not work on China - foreign ministry

* China says door to dialogue open if based on mutual respect

* U.S. measures will have no effect on China - commerce ministry (Adds comment from China’s commerce ministry in paragraphs 13, 14)

BEIJING, Aug 2 (Reuters) - China on Thursday urged the United States to return to reason after the Trump administration sought to ratchet up pressure for trade concessions by proposing a higher 25-percent tariff on $200 billion worth of Chinese imports.

U.S. Trade Representative Robert Lighthizer said on Wednesday that President Donald Trump directed the increase from a previously proposed 10 percent duty because China has refused to meet U.S. demands and has imposed retaliatory tariffs on U.S. goods.

Trump’s threats of higher tariffs weighed on China’s financial markets. But Chinese Foreign Ministry spokesman Geng Shuang reiterated at a regular news briefing that the United States’ efforts at “blackmail” would fail.

“We would advise the United States to correct its attitude and not try to engage in blackmail. This won’t work on China,” Geng said.

“Secondly, we would advise the U.S. side to return to reason, and not blindly let emotions affect their decisions, because in the end this will harm themselves,” Geng said.

Chinese shares fell on Thursday, and so far this year, the Shanghai Composite Index has slumped more than 16 percent, the world’s second-worst performing stock index.

The Chinese yuan also ticked lower against the dollar, extending its year-to-date decline to more than 4.5 percent.

There have been no formal talks between Washington and Beijing for weeks over Trump’s demands that China make fundamental changes to its policies on intellectual property protection, technology transfers and subsidies for high technology industries.

Geng said China’s door to dialogue on the trade dispute is open, but that it had to be based on mutual respect and equality.

“The current unilateral threats and pressure from the United States will only backfire,” he said.

Two Trump administration officials told reporters on a conference call that Trump remains open to communications with Beijing and that through informal conversations the two countries are discussing whether a “fruitful negotiation” is possible.

The higher tariff rate, if implemented, would apply to a list of goods valued at $200 billion identified by the USTR last month as a response to China’s retaliatory tariffs on an initial round of U.S. tariffs on $34 billion worth of Chinese electronic components, machinery, autos and industrial goods.

China’s commerce ministry said the U.S. tactics will have no effect on China, and will disappoint countries that are against trade wars.

“China is fully prepared for the United States’ threats to escalate the two countries’ trade war and will have to fight back to defend its dignity and the interests of its people,” said the statement posted on the Ministry of Commerce’s website on Thursday.

Trump has ultimately threatened tariffs on over $500 billion in Chinese goods, covering virtually all U.S. imports from China.

The USTR said it will extend a public comment period for the $200 billion list to Sept. 5 from Aug. 30 due to the possible tariff rate rise.

The list, unveiled on July 10, hits American consumers harder than previous rounds, with targeted goods ranging from Chinese tilapia fish and dog food to furniture, lighting products, printed circuit boards and building materials. (Reporting by Ben Blanchard and Ryan Woo; Writing by Michael Martina; Editing by Simon Cameron-Moore and Richard Borsuk)